Wages of advertising creatives in Singapore rise. Will the good times last?

Creatives in Singapore are experiencing a higher percentage growth of median gross wage, according to results from the Ministry of Manpower’s (MOM) annual occupational wage survey released in mid-July.

A survey conducted between July and December 2022 collected data from 4,350 private-sector employers who employed around 222,300 full-time resident workers contributing to the Central Provident Fund (CPF) in June 2022.

The median wage for creatives in 2022 was around $6,365 (or SG$ 8,600), compared to $4,041 (SG$ 5,460), a 52% increase. The survey data was based on gross wage, encompassing basic salary, overtime pay, commissions, allowances, and regular cash payments. This is before deducting employee CPF contributions and personal income tax, excluding employer CPF contributions, bonuses, stock options, lump sum payments, and in-kind payments.

A likely reason for the wage growth for creatives is due to the challenge of understanding clients' and audiences' needs and interests. Creatives are highly valued for their ability to drive branding and narrative innovation. They must adapt advertising strategies quickly to evolving social media platforms, incorporating concepts like inclusivity and sustainability and using partnerships to achieve viral online success.

However, in light of recent weaker-than-expected organic revenue results from major holding companies, Campaign asks: What potential impact could this have on the wage growth trajectory for creatives going forward?

Most advertising companies work short-term. Quarter to quarter, cost management is the critical success metric for maintaining a healthy share price and keeping shareholders and the city happy. Over the last few years, we have seen that with the seismic shocks to world trade, the unpredictability of geopolitics, pandemics, war and nature, forecasting has become very difficult for companies and, therefore, agencies. Most agencies are still remunerated relative to the level of advertising spent by clients. So, as spending fluctuates or shifts in pattern, agencies have to react to manage their own business. They do this by controlling costs, which are predominantly people.

Agencies talk about being ‘people businesses’ because their costs are made up of people, not because they are a people-centered business. The staffing ‘correction’ we saw over the pandemic period, and not just in advertising, has left significant skill gaps in most organisations. It is not easy to ramp up or scale down permanent staff, so the baseline number of people in agencies has reduced, in some cases dramatically, to ensure they are not left with an unsustainable cost burden when client spending drops. However, when clients increase spending, this requires reactive hiring, often paying inflated salaries relative to experience because contractual commitments to clients have punitive clauses for missing staff.
While low-level or back-office work can be outsourced, front-office, client-facing work with FTE must be visible and accountable to clients. The market for such people is tiny, particularly in Southeast Asia, and so inflation at times when clients are spending more heavily is rampant. Not only do agencies offer 50% more salary to individuals, but they also need to make offers so attractive as to expedite hiring, buying people out of contracts earlier than notice periods would typically allow.

This is not a sustainable model for agencies. This is why they have always sought to drive down costs through their business strategy. This you can see from the move to siloed specialisation, creating repetitive tasks in a process to eventually automate.
That was why a few years ago, you saw the rush to develop offshore hubs, this being hailed as the solution to wage inflation, which would have been a great idea had everyone else not had the same great view—at the same time, driving up labour costs in every offshore market, making it a less viable solution.

The current solution is AI. Investment in AI is a cost-cutting initiative for most agency groups. Some have said as much. This doesn’t mean we won’t see talented people getting significant pay raises in the industry; these people will be sought after and well-remunerated. However, my view is that taking a snapshot of 2022 vs. 2021 does not reflect an ongoing sustainable trend. We will still point to individual cases where it happens. Still, these will be exceptions in an industry primarily focused on using technology to reduce costs and reliance on human labour.

In our line, the closest creative role is visual merchandising. Visual merchandisers play an increasingly important role in communications and sales for many brands, especially on the retail front.

Under the WMH group, Visual Merchandising Studio (VMS) helps clients and brands in both consulting and training in VM’s knowledge and skills. Whether wage grows or not, demand for VM solutions and training is growing. In the retail space, there is also talent competition and increased demand for the skills and knowledge of the retail staff.

This wage growth will likely inspire talent to join or stay in retail, upskill, and elevate their professional performance, especially in delivering qualitative CX (customer experience). WMH’s MODE Academy nurtures future-ready talent who can envision and deliver more fulfilling customer experiences, strengthening their employability and helping them prove their worth in measurable ways.

The need or premium for creative talent will increase as technology equalises and democratises the creative process's more automated and essential elements. Visionary leadership will be crucial to see the wood for the trees as we see a considerable spike in content proliferation. What is clear is that skills like prompt engineering and generative AI tools must be integrated into the creative process and understood across the creative community. Overall I expect a shift in the type of wages being paid across the agency ecosystem, i.e. reduced production, but an increased need for new skills and strategic application of AI capabilities. Hopefully, we’ll see positive improvements in market speed while reaping the benefits of more impactful work!

Digital has led to disintermediation (clients transacting directly with the likes of Google or Meta), but most crucially, it fundamentally changed consumer habits and how we buy. The truism, but bear with me, that the old analogue model, predicated on supply chain domination and mass marketing, has become dysfunctional and ineffective. Most of the hold co-agencies originated in that era. In today’s world, scale doesn’t matter, it’s all about speed.

It’s a battle between an elephant and a cheetah—the elephant will lose despite its size and strength, and that’s what we’re witnessing across the board, with many large advertisers having a chronic growth problem. In response to this change, most traditional agencies acquired digital expertise; however, continued to operate within a legacy framework of campaign-led operations.

Their continued focus on legacy metrics such as impressions, reach or share of voice has been undermining the value of marketing agencies and reducing their role to simply minimising the cost of media. So you end up in a situation where you have a struggling client and a service provider unable to challenge the status quo, both likely perpetuating the cycle and eroding each other’s value. The disruption in the ad industry has accelerated during the pandemic when most hold companies trimmed down their teams. We now have a situation where the teams are very lean and often relatively junior, and the market conditions are again tight, meaning growth will be hard to find.

The cost of living crisis and salary inflation will likely exacerbate the issue further—the agencies will remain under pressure to attract and retain talent whilst meeting the demands of both shareholders and clients. History teaches that in the war for talent, the talent wins. It also teaches that we never learn from history.

This post is filed under... Sounding Board: APAC experts speak on marketing and comms issues